We all know that Fibonacci is usually used to find potential turning points in the market by watching its retracements (23.6 , 38.2, etc…)
Instead of calculating the distance between our entry and stop-loss, project and look for potential take profits levels to fit our RRR; we simply drag and drop Fibonacci.
In order to be able to use Fibonacci that way, we will need to tweak its settings.
Simply edit its levels as shown below.
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- 0 would be our Stop Loss
- 1 goes for the Entry
- 2 is for R1 where the distance from entry to R1 is equal to the distance from Stop Loss to Entry
- 3 for R2 and so on…
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Voila! Now we have a tool to visually calculate and project Risk Reward Ratio for our potential setups.
Make good use of it!
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